• by Laurie Sullivan  @lauriesullivan, February 27, 2025

Advertisers are giving conversational commerce media their own budget. Fifty-three percent are doing so by separating the line item from programmatic and paid social, according to data released today.

Budgets for this media are expected to grow, with 73% of respondents planning to increase their investments by 25% to 50% in the next two years.

Marketers today measure the impact of conversational ads on recurring revenue at 68%, while 64% look at conversions, 62% analyze clicks, and 61% look at customer lifetime value, per a study from Smartly, an AI-powered advertising tech company.

Seventy percent of marketers participating in the study said that in the next two years they intend to measure conversational ads’ impacts on brand reputation, while 64% cited customer experience ratings and 62% said customer behavioral signals and engagement.

Conversational commerce continues to make an impact on ways advertisers interact with consumers, generating a level of intent signals that justify budgets for one-on-one ad targeting and through an opt-in process allows brands to get to know customers personally.

The combination of creative and media supported by automation, AI, machine learning and decisioning gives brands a way to have a direct conversation with consumers in the ad unit, rather than relying on a click to transport the person to another platform or website.

“The consumer can ask questions of the brand and have a direct conversation in real time,” said Laura Desmond, chief executive officer at Smartly.

Desmond said the conversational ad unit running on Meta’s platforms “ushers in a one-to-one world” where ads are personalized to the consumer. The consumer opts in to talk with the brand in the ad unit, which provides opportunities to analyze text in the conversation.

“It becomes important first-party data,” she said, adding that “it makes the ads more targeted the next time.”

The one-size-fits-all advertising strategy no longer exists, according to Neil Jones, head of performance media at Boots, a UK health and beauty retailer for more than 175 years with about 1,800 stores.

"The real power of conversational commerce is how it creates genuine, one-on-one connections with shoppers at key decision moments," Jones said.

He said when Boots interacts with customers in personalized conversations about what they need, the company does more than make better recommendations. It opens dialogue with consumers and a new channel that drives results.

Boots, a UK health and beauty retailer for more than 175 years with about 1,800 stores, runs Meta Advantage+ conversational campaigns through Smartly, which commissioned Forrester Consulting to run an online survey of 822 marketers working with digital advertising and conversational ads in North America EMEA, and Asia Pacific to get an idea of what they need. Many are scaling approaches in conversational commerce, but are frustrated by the perceived lack of tools, unified platforms, and practices.

Half of respondents acknowledge that they have too many tools that don’t work together, and lack the ability to personalize creative assets, while nearly half feel their creative process is not enabled with the right tools and that limited budgets are an issue.

This is compounded by marketers’ inability to measure the effectiveness of advertising across buyer journeys that have moved in a variety of directions.

When asked whether the importance of creative lies in driving full-funnel effectiveness, from awareness to conversion, 43% said it is important, while 25% said it is critical 19% cited it as nice to have; 9% said it is important; and 5% said not at all.

The effectiveness of creative assets is lacking for most organizations. Thirty-four percent said the creative is effective, while 25% said it is very effective, 23% said it is nice to have, 13% said it is not effective, and 5% said it is not effective at all.

Some 64% said gathering insights has become the biggest challenge due to the state of existing internal data. The same percentage also cites too many internal point solutions.

Then there are the 63% who find it difficult to interpret the new data collected, and 62% who have difficulty acting on the clear insights they can generate.

Some 57% say they disengage with creative, while 52% say they find too much context switching is required between customer-facing apps and tools.

AI adoption has become tempting, but among U.S. retail and wholesale digital experience professionals surveyed separately by Forrester, 86% say they use or experiment with GAI to enhance or transform their customers’ digital experience.

Some 35% are experimenting with generative AI with customers, but 63% of marketers have security concerns, while 60% worry about data preparation and 56% say they have concerns about investment costs.